British wage growth rises but will not trouble policymakers

UK wage growth continues to lag behind rising inflation, relieving the pressure on policymakers to begin the return of the bank rate to more normal levels.

Official labor market figures released on Wednesday by the Office for National Statistics (ONS) showed year-over-year growth in average weekly wages, excluding bonuses, picked up to a five-month high of 2.3 percent in May, from 1.8 percent in April.

CPI inflation itself has outstripped wages growth for some months and now stands about one percentage point ahead of wage growth, limiting household spending and saving.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics told Xinhua that the wages figures would not prompt any change in monetary stance from the central bank the Bank of England (BOE) and its Monetary Policy Committee (MPC).

However, the rise in CPI inflation is generated not domestically, but by the fall in sterling against other currencies in the wake of the Brexit vote.

As such, the increase in the annual wage figure is not the beginning of an overheating of the economy.

Wage growth will hold steady at the 2 percent level over the coming months, said Tombs, with slack in the labor market supplemented by a ready supply of EU workers, for as long as the UK remains in the EU.

However, the subdued nature of the jobs market is long-term and reflects current uncertainties over Brexit and economic growth.

Job figures, also released on Wednesday, showed unemployment to be at its lowest level since 1975.

The UK's rate of joblessness was at 4.5 percent, lower than all but four other European Union nations and less than half the rate of France, a comparable developed economy.